SEC ready to go to court for term limits on broker-directors

The Securities and Exchange Commission (SEC) on Monday defended its proposal to impose a 10-year cumulative term limit for broker-directors, saying it is prepared to go to court after an affected party challenged the measure.

According to SEC chairman Francis Lim, the agency will continue to stand by its planned memorandum circular (MC) on the term limit of independent directors, capping it at 10 years, which could affect four of the five current broker directors.

“We honestly believe that it’s the right thing to do for the market and we will stand by that decision, but in any event, we’re still in the process of receiving comments and we will decide according to what is best for the market after considering those comments,” he told reporters on the sidelines of the EJAP Sustainability Forum in Makati City.

“We’re not afraid to go to court if they want to go to court,” he added.

This comes as the SEC, in a draft MC released on March 3, indicated plans to limit broker-directors—individuals who represent trading participants on an exchange board—to a maximum cumulative service period of 10 years. The draft was released for comments until March 19, 2026.

The proposal provides that a broker-director may be elected for a one-year term, and may serve a cumulative of five years, whether consecutive or intermittent, followed by a mandatory two-year cooling-off period before being eligible for reelection.

A director may then serve an additional term of up to five years, as long as the 10-year cumulative cap is not exceeded.

The SEC said the proposal seeks to push “fair and effective representation,” and give way for qualified brokers to bring in “new perspectives.”

The proposal would impact several broker-directors at the Philippine Stock Exchange (PSE) including Ma. Vivian Yuchengco with 28 years, Eddie Gobing with 25 years, Wilson Sy with 12 years, and Diosdado Arroyo with six years.

Yuchengco, who heads the First Resources Management and Securities Corp., was reported as saying that ownership rights must also be respected, and that she would let her lawyers look into the matter.

A number of business groups such as the Management Association of the Philippines (MAP), the Financial Executives Institute of the Philippines (FINEX), the Institute of Corporate Directors, the Capital Markets Developments Foundation Inc., and Investment House Association of the Philippines have issued a joint statement expressing support for the proposal.

“The proposed circular introducing reasonable term limits for broker-directors would be a valuable step toward reinforcing the integrity and resilience of the Philippine capital markets,” the joint statement read.

“Term limits do not diminish shareholder choice—they activate it. They ensure that the right to vote is exercised on a continuing basis, with stockholders periodically selecting from among other qualified brokers to bring fresh perspectives and renewed accountability to the board,” it added. — BM, GMA Integrated News